Canadian Imperial Bank Of Commerce · TSX:CM
Canadian Imperial Bank Of Commerce — Q1 2024 Earnings Presentation
58 slides from Canadian Imperial Bank Of Commerce's earnings presentation, Feb 29, 2024
Slide 1: Quarterly Results Presentation First Quarter 2024
Quarterly Results Presentation First Quarter 2024 February 29, 2024 All amounts are in Canadian dollars unless otherwise indicated.
Slide 2: Forward-Looking Statements
Forward-Looking Statements First Quarter 2024 A NOTE ABOUT FORWARD-LOOKING STATEMENTS: From time to time, we make written or oral forward-looking statements within the meaning of certain securities laws, including in this Investor Presentation, in other filings with Canadian securities regulators or
Slide 3: CIBC Overview
CIBC Overview Victor Dodig President & Chief Executive Officer
Slide 4: CIBC Overview
CIBC Overview First quarter results demonstrate continued momentum driven by successful execution of our strategy Diluted EPS Expense Growth (YoY %) Reported $1.77 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Adjusted1,2 $1.81 Reported 48% 1% 4% (1)% (22)% YoY +354% / (7)%2 Adjusted 2 9% 7% 6% 3% 3% Operating Leve
Slide 5: Our Progress: Delivering against our strategic priorities
Our Progress Delivering against our strategic priorities Imperial Service money-in Financial plans completed by clients Leading in Mass Affluent balances1 grew $1.4B in Q1 were up 54% versus the prior year in & High Net Worth (+88% versus the prior year) Canadian Private Wealth Net new client acquis
Slide 6: Our Progress: Positive impact on environment, clients and communities
Our Progress Creating a positive impact on our environment, clients and communities Our commitment to the environment, sustainability and governance Named amongst Canada’s Top 100 Employers for the 12th Selected as Sole Structuring Advisor on consecutive year Green Bond Framework by the Government o
Slide 7: Financial Overview
Financial Overview Hratch Panossian Senior Executive Vice-President & Chief Financial Officer
Slide 8: Financial Results Overview
Financial Results Overview Strong performance underpinned by a diversified but connected business model Diluted Earnings Per Share Return on Equity Revenue Operating Leverage Reported $1.77 Reported 13.5% $6.2B Reported 27.3% +5% YoY Adjusted1 $1.81 Adjusted1 13.8% Reported / Adjusted1 Adjusted1,2 2
Slide 9: Financial Results Overview
Financial Results Overview Continued revenue growth and expense discipline drive record pre-provision pre-tax earnings Revenue Reported ($MM) Q1/24 YoY QoQ • Revenue growth of 5% YoY, driven by margin expansion, volume growth, Revenue 6,221 5% 6% higher fee income, and strong trading revenues Non-Tr
Slide 10: Net Interest Income (NII)
Net Interest Income (NII) NII (ex-trading) grew 6%, supported by strong margins and broad-based volume growth Net Interest Income Trailing NIM Trends1 Canadian Personal & Commercial NIM1,4,6 U.S. Commercial & Wealth NIM1,6 Balance sheet repricing offset by mix shift Endnotes are included on slides 4
Slide 11: Balance Sheet
Balance Sheet NII continues to benefit from growth in loans and deposits, as well as margin expansion Average Assets ($B) & Yields1,2,3 Average Liabilities and Equity ($B), & Costs1,4,5 Client Deposit Mix (Spot Balances)6 • Loan yields and deposit costs continue to rise, capturing recent rate increa
Slide 12: Non-Interest Income
Non-Interest Income Strong trading activity and higher fees drive growth in non-interest income Non-Interest Income by Category ($MM)4,6 Market-Related Fees4 Transactional Fees4 Reported: $2,616MM 5 1 2 2 3 • Non-interest income up 9% YoY, or 3% excluding trading • Transactional revenues up 4% YoY d
Slide 13: Non-Interest Expenses
Non-Interest Expenses Contained through focused investments and continued realization of efficiencies Adjusted1 Expenses ($B), YoY Expense Growth & Operating Leverage Reported: $4,462MM Reported: $3,465MM +3% +1% • Reported expenses down 22% YoY, primarily due to an increase in legal provision in th
Slide 14: Capital and Liquidity
Capital and Liquidity Robust balance sheet, with capitalization and liquidity in excess of our normal course operating targets Capital Position $B Q1/23 Q4/23 Q1/24 • CET1 ratio of 13.0%, up 64 bps sequentially Average Loans and Acceptances1 529.2 539.5 538.8 1 • Increase primarily due to: Average D
Slide 15: Canadian Banking: Personal & Business Banking
Canadian Banking: Personal & Business Banking Double-digit revenue growth and relatively stable expenses contribute to PPPT growth of 25% and strong operating leverage • Net interest income up 13% YoY driven by margin expansion and Reported Adjusted1 higher loan and deposit volumes ($MM) Q1/24 YoY Q
Slide 16: Canadian Banking: Commercial Banking & Wealth Management
Canadian Banking: Commercial Banking & Wealth Management Core business strength driven by relationship-based client franchise and strong markets amidst a challenging macro environment • Net interest income down 3% YoY and 1% sequentially Reported & Adjusted1 ($MM) Q1/24 YoY QoQ • Modest growth in co
Slide 17: U.S. Region: Commercial Banking & Wealth Management
U.S. Region: Commercial Banking & Wealth Management Franchise is well-positioned for growth when demand returns • Net interest income down 3% YoY mainly driven by lower deposit Reported Adjusted1 volumes and mix shift to higher cost products (US$MM) Q1/24 YoY QoQ Q1/24 YoY QoQ • Deposits down 2% YoY
Slide 18: Capital Markets & Direct Financial Services
Capital Markets & Direct Financial Services Core revenue growth supported by strong Investment Banking and trading activity • Revenue growth of 5% YoY, or 2% on an adjusted basis1 excluding Reported Adjusted1 the TEB gross-up: ($MM) Q1/24 YoY QoQ Q1/24 YoY QoQ • Corporate and Investment Banking up 1
Slide 19: Corporate & Other
Corporate & Other Improved results supported by normalizing Treasury revenues • Revenue lower YoY and higher sequentially (adjusted1 revenue Reported Adjusted1 higher YoY and sequentially): ($MM) Q1/24 YoY QoQ Q1/24 YoY QoQ • Net interest income higher due to favourable Treasury- related revenues du
Slide 20: In Conclusion
In Conclusion A continued focus on execution and sustainable growth Continued momentum across our diversified business is driving sustainable and profitable growth Consistently delivering against communicated targets through strong execution of our client-focused strategy Robust balance sheet with c
Slide 21: Risk Overview
Risk Overview Frank Guse Senior Executive Vice-President & Chief Risk Officer
Slide 22: Key Messages
Key Messages Loan Loss Performance Credit Performance Prudent Coverage Retail delinquencies trended Q1 loan loss performance within higher, as expected, while the Allowance coverage is strong; our expectations despite business and government loans we are prepared for expected macroeconomic environme
Slide 23: Allowance for Credit Losses
Allowance for Credit Losses Allowance for credit losses continued to increase • Our total provision for credit losses was $585MM in Q1/24, compared to $541MM last quarter • Provision on impaired loans was $492MM, up $14MM quarter-over-quarter • Higher impaired provisions in retail loan portfolio, we
Slide 24: Credit Performance – Gross Impaired Loans
Credit Performance – Gross Impaired Loans Gross impaired loan ratios stabilized and flat QoQ • Gross impaired loan ratio was flat QoQ, with increases in retail offset by write- Gross Impaired Loan Ratios Q1/20 Q1/23 Q4/23 Q1/24 offs in business and government loans Canadian Residential Mortgages 0.3
Slide 25: Canadian Consumer Lending
Canadian Consumer Lending Net write-offs and delinquencies trending in line with our expectations Net Write-offs: Reported Net Write-Offs Q1/20 Q1/23 Q4/23 Q1/24 Canadian Residential Mortgages 0.01% <0.01% <0.01% <0.01% • Overall consumer net write-offs increased slightly QoQ, mainly attributable to
Slide 26: Canadian Real Estate Secured Personal Lending
Canadian Real Estate Secured Personal Lending Mortgage delinquencies perform in line with expectation • Mortgage originations continue to be driven by clients with deep and 90+ Days Delinquency Rates Q1/20 Q1/23 Q4/23 Q1/24 balanced relationships Total Mortgages 0.30% 0.16% 0.21% 0.25% • 87% of mort
Slide 27: U.S. Commercial Real Estate – Office Portfolio
U.S. Commercial Real Estate – Office Portfolio Majority of challenges behind us • Progress made as we work through maturity profile • Gross impaired loan ratio has only moderately increased this quarter; we would expect this to decline going forward • 13.7% allowance for credit loss coverage of loa
Slide 28: In Summary
In Summary Credit performance in line with expectation Macroeconomic factors are expected to remain dynamic Our commercial real estate team has managed through the majority of substantive issues in the US office sector; remainder of portfolio remains stable and well-diversified Robust provisions pre
Slide 29: Appendix
Appendix CIBCO®
Slide 30: Business Segment Trends: Personal & Business Banking
Business Segment Trends Canadian Banking: Personal & Business Banking Revenue ($MM)2,3 Non-Interest Expenses ($MM) & Efficiency Ratio (%) ROE Reported 23.6% Adjusted1 23.8% YoY (3)% / (3)%1 1 Operating Leverage 1 1 1 (Rolling 4Q Avg.) Net Interest Margin on Average Interest-Earning Assets4 Average L
Slide 31: Business Segment Trends: Digital Adoption & Engagement
Business Segment Trends Growing Digital Adoption & Engagement in Canadian Personal Banking1 Digital Adoption Rate2 Active Digital Banking Users3 Digital Channel Usage (MM) (# of Sessions, MM) Awards & Recognition Ranked #1 for overall satisfaction in mobile banking by J.D. Power for the third year R
Slide 32: Business Segment Trends: Commercial Banking & Wealth Management
Business Segment Trends Canadian Banking: Commercial Banking & Wealth Management Revenue ($MM) Net Interest Margin on Average Non-Interest Expenses ($MM) Interest-Earning Assets2 & Efficiency Ratio (%) ROE Reported & Adjusted1 21.3% YoY 0% Net Wealth Client Growth7 Average Loans & Deposits ($B)3,4 A
Slide 33: Business Segment Trends: Personal & Commercial Banking
Business Segment Trends Canadian Banking: Personal & Commercial Banking1 Revenue ($MM)3,4 Margins benefit from higher rates, moderating headwinds from deposit mix and mortgage pricing Net Interest Margin on Average Interest-Earning Assets5 Mortgage Portfolio Spreads (bps)6 2 2 2 Non-Interest Expense
Slide 34: Business Segment Trends: U.S. Region
Business Segment Trends U.S. Region: Commercial Banking & Wealth Management ($US) Revenue ($MM) Net Interest Margin on Average Non-Interest Expenses ($MM) Interest-Earning Assets2 & Efficiency Ratio (%) ROE Reported (0.3)% Adjusted1 2.2% YoY (7)% / (5)%1 1 Clients with Private 1 Banking & Wealth7 15
Slide 35: Business Segment Trends: Capital Markets & DFS
Business Segment Trends Capital Markets & Direct Financial Services Revenue (TEB) ($MM)1 Revenue Composition by Line of Business ($MM)1 ROE Reported 26.4% Adjusted2 24.8% YoY 1% / (1)%2 2,3 2 2 DFS Revenue Growth Non-Interest Expenses ($MM) & Efficiency Ratio (%) Average Loans & Deposits ($B)4,5 +5%
Slide 36: Funding & Liquidity
Funding & Liquidity A well-diversified, high-quality, client-driven balance sheet • Liquidity and funding position continue to remain well-above regulatory requirement • Client deposits are the primary source of funding, comprising over $500B of the total funding base • Funding strategy is supplemen
Slide 37: Interest Rate Sensitivity
Interest Rate Sensitivity Well-positioned to demonstrate agility in a changing rate environment Net Interest Income Sensitivity to SBU Composition of Structural Interest Rate Environment in a +/- 100 bps change ($MM)1 Interest Rate Sensitivity1,2 Canada and the U.S.3 • Year 1 benefit of $277MM from
Slide 38: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) Total PCLs trended higher in Q1/24 Provision for Credit Losses up YoY and QoQ ($MM) Q1/23 Q4/23 Q1/24 • Impaired provisions were up in Q1/24, largely due to higher impairments in the Cdn. Personal & Business Banking 158 282 329 Canadian retail portfolio, partially o
Slide 39: Allowance Coverage
Allowance Coverage Allowance coverage remains higher than the pre-pandemic level Total allowance coverage ratio up YoY and QoQ Total Allowance Coverage Q1/20 Q4/20 Q1/23 Q4/23 Q1/24 • Increase QoQ is due to higher allowances in the performing portfolio Canadian Credit Cards 4.0% 6.2% 5.1% 4.2% 4.2%
Slide 40: Credit Portfolio Breakdown
Credit Portfolio Breakdown Lending Portfolio has a strong risk profile Credit portfolio is well diversified Overall Loan Mix (Net Outstanding Loans and Acceptances) • 62% of our portfolio is consumer lending, composed mainly of mortgages, with uninsured having an average loan-to-value of 51% • Total
Slide 41: Canadian Uninsured Residential Mortgages
Canadian Uninsured Residential Mortgages Credit bureau score1 and LTV2 distributions remain healthy Credit Bureau Score1 Distribution 3 3 Loan-to-Value (LTV)2 Distribution 3 3 Endnotes are included on slides 49 to 54. First Quarter, 2024 40
Slide 42: Canadian Uninsured Residential Mortgages – Q1/24 Originations
Canadian Uninsured Residential Mortgages – Q1/24 Originations1 Credit quality of new originations continues to remain high • Originations of $7B in Q1/24 • Average LTV2 in Canada: 67%, GVA3: 62%, GTA3: 66% Credit Bureau Score4 Distribution 3 3 Loan-to-Value (LTV)2 Distribution 3 3 Endnotes are inclu
Slide 43: Canadian Mortgages Renewal Profile
Canadian Mortgages Renewal Profile Impacts of payment increases at renewal expected to be manageable • Using an illustrative 6% rate at time of renewal, and no borrower income growth since origination, mortgage payment increases are forecasted to be less than 4.1% of clients’ income • Low LTV of ren
Slide 44: Commercial Real Estate
Commercial Real Estate Commercial real estate exposure is well diversified • Canada represents 63% of total Canadian & U.S. real estate exposure • Gross impaired loans as a percentage of total Canadian & U.S. real estate is 1.71% Canadian Commercial Real Estate Exposure by Sector1 U.S. Commercial Re
Slide 45: Commercial Real Estate - Multi-Family Loans
Commercial Real Estate - Multi-Family Loans Credit quality continues to remain strong • Multi-family portfolios1 are well diversified across various regions in both Canada and the U.S., with healthy risk-ratings and robust overall loan-to-values • No impaired balances as at Q1/24 Canada US Ontario C
Slide 46: Trading Revenue (TEB) Distribution
Trading Revenue (TEB) Distribution1 Robust trading performance in recent volatile market MM MM 30 30 20 20 10 10 0 0 10 10 20 ov 23 ec 23 an 24 20 Trading evenue Va Endnotes are included on slides 49 to 54. First Quarter, 2024 45
Slide 47: Forward Looking Information
Forward Looking Information Variables used to estimate our Expected Credit Losses1 Forward-Looking Information Variables Avg. Value over the next Avg. Value over the Avg. Value over the next Avg. Value over the Avg. Value over the next Avg. Value over the 12 months remaining forecast period 12 month
Slide 48: Items of Note
Items of Note First quarter 2024 Period Q1/24 Reporting Segments Pre-Tax EPS After-Tax & NCI Effect Effect Effect ($MM) ($MM) ($/Share) Charge related to the special assessment imposed by the Federal Deposit Insurance 91 68 0.07 U.S. Commercial Banking and Wealth Management Corporation (FDIC) on U.S
Slide 49: Reconciliation
Reconciliation GAAP (reported) to non-GAAP (adjusted) results1 $MM Total Reporting Segment Q1/24 Reported revenue 1,561 Non-trading revenue (856) 1 Trading revenue 705 Capital Markets and Impact of item of note Direct Financial Services Corresponding impact on TEB in Capital Markets and Direct Finan
Slide 50: Endnotes
Endnotes First quarter 2024 Slide 3 – CIBC Overview 1. See note 1 on slide 56. 2. Adjusted results are non-GAAP measures. See slide 55 for further details. 3. Pre-provision, pre-tax earnings (PPPT) is revenue net of non-interest expenses and is a non-GAAP measure. See slide 55 for further details. 4
Slide 51: Endnotes
Endnotes First quarter 2024 Slide 10 – Balance Sheet 1. Average balances are calculated as weighted average of daily closing balances. Average interest-earning assets include interest-bearing deposits with banks, interest-bearing demand deposits with Bank of Canada, securities, cash collateral on se
Slide 52: Endnotes
Endnotes First quarter 2024 Slide 15 – Canadian Banking: Commercial Banking & Wealth Management 1. Adjusted results are non-GAAP measures. See slide 55 for further details. 2. Pre-provision, pre-tax earnings is revenue net of non-interest expenses and is a non-GAAP measure. See slide 55 for further
Slide 53: Endnotes
Endnotes First quarter 2024 Slide 24 – Canadian Consumer Lending 1. See notes 18-20 on slide 57. 2. Includes wealth management loans under Canadian Commercial Banking and Wealth Management Slide 25 – Canadian Real Estate Secured Personal Lending 1. GVA and GTA definitions based on regional mappings
Slide 54: Endnotes
Endnotes First quarter 2024 Slide 32 – Business Segment Trends: Personal & Commercial Banking cont’d… 5. Certain additional disclosures for net interest margin on average interest-earning assets (NIM) have been incorporated by reference and can be found on pages 41-47 in the Q1/24 Report to Sharehol
Slide 55: Endnotes
Endnotes First quarter 2024 Slide 40 – Canadian Uninsured Residential Mortgages 1. Starting Q2/23, our primary credit score provider is TransUnion as opposed to Equifax in the prior quarters. The scores are not identical, so score distributions up to Q1/23 are not directly comparable to score distri
Slide 56: Non-GAAP Measures
Non-GAAP Measures First quarter 2024 We use a number of financial measures to assess the performance of our business lines. Some measures are calculated in accordance with International Financial Reporting Standards (IFRS or GAAP), while other measures do not have a standardized meaning under GAAP,
Slide 57: Glossary
Glossary First quarter 2024 Definition 1 Adjusted Diluted EPS We adjust our reported diluted EPS to remove the impact of items of note, net of income taxes, to calculate the adjusted EPS. We adjust our reported net income attributable to common shareholders to remove the impact of items of note, net
Slide 58: Glossary
Glossary First quarter 2024 Definition We adjust our reported revenue and non-interest expenses to remove the impact of items of note. Commencing Q1/24, we no longer gross up tax-exempt revenue to bring it to a TEB 12 Adjusted Efficiency Ratio for the application of this ratio to our consolidated re
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